“They come to visit certain companies. They see them, they leave. But their eyes remain fixated on what they came to see.”

Michael Bleby Reporter

Meet the fund manager who runs $500m – from $10-a-night hotels

Published 19 November 2013 11:52, Updated 19 November 2013 13:03

If you meet a middle-aged American staying in a $10-a-night room in the central Java city of Yogyakarta, don’t assume he’s just another backpacker. If his name is Robert Levitt, he is a fund manager working out how to use his $US500 million in funds under management. Right now, the traffic congestion in Yogyakarta is what occupies Levitt’s mind. Traffic congestion has long been a thing in the capital city of Jakarta, with its 9 million people, but seeing the rapid growth of small-car ownership and consequent gridlock in this regional city of 400,000, tells Levitt there is an opportunity.“What does that mean?” he says. “It means they’re going to skip the evolution of stores and move straight to e-commerce. Even though there might be stores that sell what you want, you might take two hours to get there. So why bother? What I’m looking at are companies that are involved in this e-commerce.”

Indonesia is the jewel in the crown of a regional market of 600 million consumers, but its relative lack of physical and financial infrastructure – relatively few people have bank accounts and credit cards, for example – makes it also one of the hardest to penetrate. That is one of the reasons why an investor such as Adrian Vanzyl’s Ardent Capital builds e-commerce brands and learns skills in an easier market such as its home base of Thailand before applying them in harder markets like Indonesia.

“It means they’re going to skip the evolution of stores and move straight to e-commerce. What I’m looking at are companies that are involved in this e-commerce.” 

But when it comes to market research game, Levitt, whose clients are principally high net worth individuals, prefers to get on the ground. He is in the middle of a four-month stint in southeast Asia, having been in Yogyakarta since the start of October, and having spent September in Malaysia.

His $10-a-night rented room is no doubt less comfortable than he would get in a hotel in Jakarta, or even in Yogyakarta – which at least has a Hyatt Regency – but the point of his research is not to see what he already knows, Levitt says.

“There are too many investors who travel to a foreign country, are met by a limousine at the airport, travel to a luxury international hotel, have all of their meetings in that hotel as well as all of their meals at the nicest restaurants and then never get to experience the reality of the local country,” Levitt told BRW in an email on Tuesday.

“They come to visit certain companies. They see them, they leave. But their eyes remain fixated on what they came to see.”

There are too many investors who never get to experience the reality of the local country. 

Levitt was on Tuesday visiting Jakarta, the capital 540 kilometres away, for meetings with an e-commerce company called Vela Asia. On Monday he met with officials of AKR Corporindo, a publicly-listed firm building a port in Eastern Java.

“I expect to invest in this firm,” he says. “However, Indonesia, as a financial market is not the most attractive today. So, our approach is to identify our target companies, and then buy on weakness.”

Rocky ride

Levitt doesn’t just invest in emerging-market entities, but also in established companies that are exposed to the emerging-market growth story. It has been a rocky ride. In 2011, the value of his investments contracted 16 per cent. They grew between 4 per cent and 5 per cent last year and in the year to date have shown a 12 per cent return.

It’s not as if he’s completely adrift in an Indonesian jungle. The Bloomberg app on Levitt’s Blackberry gives him up-to-date financial data even in the most remote locations. But managing money for private investors, Levitt says he has more scope to conduct research than larger institutions.

“Most institutional firms are forced to conform to following a benchmark,” he says. “Private investors can have a longer term time horizon as they are much more interested in the companies into which we are investing than to comparing us to a global benchmark. There is also the problem that many institutional investors manage too much money, so they can only look at the largest cap stocks.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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